Earnings Call Transcript - BMY Q3 2024

Operator, Operator

Good day, and welcome to the Bristol-Myers Squibb Third Quarter 2024 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Mr. Chuck Triano, Senior Vice President of Investor Relations. Please go ahead, sir.

Chuck Triano, Senior Vice President of Investor Relations

Thank you, and good morning, everyone. I'm happy to be here at Bristol-Myers Squibb, and we appreciate you joining our third quarter 2024 earnings call. Joining me this morning with prepared remarks are Chris Boerner, our Board Chair and Chief Executive Officer; and David Elkins, our Chief Financial Officer. Also participating in today's call are Adam Lenkowsky, our Chief Commercialization Officer; and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. Earlier this morning, we posted our quarterly slide presentation to bms.com that you can use to follow along with Chris and David's remarks. Before we get started, I'll remind everybody that during this call we will make statements about the company's future plans and prospects that constitute forward-looking statements. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in the company's SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date and we specifically disclaim any obligation to update forward-looking statements, even if our estimates change. We'll also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of certain non-GAAP financial measures to the most comparable GAAP measures are available at bms.com. And with that, I'll hand it over to Chris.

Chris Boerner, CEO

Thank you, Chuck, and thank you all for joining us this morning. Starting on Slide 4. Our third quarter results reflect our continued focus on near-term execution and building the foundation for long-term sustainable growth. During the quarter, we saw solid demand for key products across our growth and legacy portfolios. We remained disciplined in managing expenses, and we continue to advance important pipeline programs. Let me highlight a few achievements in the quarter. Growth portfolio revenues increased 20% in Q3 at constant currency and now account for approximately half of total revenues. These are primarily young assets that have exclusivity well into the next decade. Our legacy portfolio also performed well, generating cash flow that allows us to strategically invest in growth opportunities. During the quarter, we achieved several clinical and regulatory milestones. Notably, we reestablished our presence in neuroscience with the approval of Cobenfy, which I'll speak to in a moment. We also strengthened our leading oncology portfolio. And earlier this month, we received FDA approval for an Opdivo-based perioperative treatment regimen in non-small cell lung cancer. Additionally, we continue to advance our innovative pipeline. In oncology, we presented data at ESMO, highlighting 8 new registrational opportunities. We shared positive clinical data for our nivolumab plus relatlimab high-dose combination in first-line lung cancer, which is now advancing to Phase 3. And we talked about the progress we're making across other promising assets and modalities, including our bispecific ADC and our radiopharmaceutical pipeline. This past week, at ENA, we also presented promising Phase 1 data for our PRMT5 program across all tumors. Turning to Slide 5. The acquisition of Karuna Therapeutics is a key example of how we are strengthening our long-term growth outlook. We're proud to highlight the recent FDA approval of Cobenfy, formerly known as KarXT with a strong label that reflects its efficacy and safety profile. This milestone marks significant progress in delivering value from the Karuna acquisition for patients. Cobenfy is the first truly novel mechanism approved for adults with schizophrenia in decades, and it addresses one of the most significant unmet needs in mental health. There are approximately 1.6 million people being treated for schizophrenia in the U.S. alone, many of whom have endured debilitating side effects from older treatments. Cobenfy delivers compelling efficacy without the notable side effects associated with atypicals. The BMS team has been laying the groundwork for a successful launch. We built an experienced sales and medical team engaged with payers to secure access and develop sophisticated patient support services. We have ongoing clinical programs in adjunctive schizophrenia with Phase 3 data expected in 2025. And we have expanded the ongoing ADEPT program in Alzheimer's disease psychosis with Phase 3 data expected in 2026. We remain on track to start registrational trials next year in Alzheimer's agitation, Alzheimer's cognition, bipolar disorder, and autism spectrum disorder. Adam and Samit can speak more to our launch progress in schizophrenia and other potential indications we are actively assessing for Cobenfy in Q&A. Turning to Slide 6. I'll spend a moment updating you on our progress against our key strategic priorities. First, we're focused on transformational medicines where we have a competitive advantage. We are advancing our mission to serve patients with first or best-in-class treatments across our therapeutic areas. This includes driving leadership in hematology, cardiology, and oncology therapeutic areas with products like Reblozyl, Breyanzi, Camzyos, and Opdualag. At the same time, we're strengthening our innovative pipeline by prioritizing key programs. One asset that continues to advance well is Milvexian. We continue to see considerable unmet need across indications, in particular, AF as well as a large commercial opportunity. Today, we want to share an encouraging update related to our atrial fibrillation Phase 3 trial, which continues to recruit very well. As you'll soon see on clinicaltrials.gov, we and our partner, J&J, have approved an increase in patient enrollment size. This is because, at this time, based on the review of event rates, we are seeing a lower rate of strokes and systemic embolism than originally anticipated, and the increased enrollment supports maintaining the planned data readout in 2027. As a reminder, as described in our published study design paper, we indicated that the sample size may be adjusted based on review of event rates. We remain confident in the design and progress of the program. Beyond Milvexian, we continue to advance other programs where we have a right to win. This includes our CD19 NEX-T cell therapy, our radiopharmaceutical and protein degradation platforms, as well as additional indications for Cobenfy. Our second priority is driving operational excellence. We are reviewing overall spending and prioritizing investments that will deliver the best long-term returns. We remain on track to deliver $1.5 billion in savings by the end of 2025. These savings will be reinvested into high ROI opportunities that serve patients' needs and accelerate growth. We are becoming a more agile company with stronger commercial and pipeline execution. Our progress on this front was demonstrated by the performance of our growth portfolio in Q3, the approval of Cobenfy, and acceleration of key programs. We see the drive for greater operational excellence as a continuous process. As such, we're exploring opportunities to further improve productivity and efficiency over the coming quarters. Our third priority is to strategically allocate capital for long-term growth and returns. We remain focused on our near-term goal of deleveraging our balance sheet. We made further progress during Q3 and are on track to pay down our target of $10 billion of debt by the first half of 2026. We're committed to the dividend, and we will continue to invest strategically in growth through our own pipeline as well as sourcing innovation externally. Now turning to upcoming milestones on Slide 7. At the American College of Rheumatology's Annual Meeting in November, we will present promising Phase 1 data for our CD19 NEX-T cell therapy. This is a next-generation immunology asset, leveraging the Breyanzi construct. We are optimistic about its potential to deliver benefits for patients across multiple immunology indications by resetting the immune system. In late December, we expect the FDA's decision on the subcutaneous formulation of nivolumab. We anticipate this launch in early 2025 will provide an important benefit for both patients and physicians while extending our leadership in immuno-oncology into the next decade. We're also on track to share top-line Phase 3 data from Sotyktu in psoriatic arthritis by year-end. This data should help strengthen the competitive profile for Sotyktu as roughly one-third of psoriasis patients also have psoriatic arthritis. Turning to our outlook on Slide 8. Given the strength of our results year-to-date, we are raising both our full year revenue target and our full year EPS guidance. David will discuss these updates in more detail shortly. Looking ahead, I'm confident in our ability to deliver long-term value for patients and our shareholders. To summarize on Slide 9, I'm pleased with our achievements in critical areas. Our overall business mix is beginning to transform as our growth portfolio is becoming a bigger component. The U.S. approval of Cobenfy adds another asset with multibillion-dollar potential to serve more patients and accelerate growth. Our pipeline continues to advance with additional near-term catalysts and we are maintaining a disciplined focus on expense management, driving initiatives across the company to lower costs. These actions underscore our focus on executing in the near term while laying the groundwork for long-term sustainable growth. We look forward to keeping you updated as we build momentum with important milestones in 2025 and significant data flow in 2026. Before I close, I want to thank our employees for their dedication and performance in the quarter. Together, we are building a strong future for BMS and the patients we serve. Now I'll turn it over to David.

David Elkins, CFO

Thank you, Chris, and good morning, everyone. I'm pleased to share our quarterly financial performance. As a reminder, unless otherwise stated, all comparisons are made from the same period in 2023 and sales growth rates will be discussed on an underlying basis which excludes the impact of foreign exchange, all references to our P&L on a non-GAAP basis. Let's start on Slide 10 with some highlights from our third quarter sales. We demonstrated solid commercial performance in the third quarter with higher sales driven primarily by our growth brands. The growth portfolio delivered another quarter of double-digit growth, up 20% with continued progress across key brands, including Reblozyl, Breyanzi, and our legacy portfolio also performed well with U.S. growth led by Eliquis, partially offset by lower sales of Sprycel. As a reminder, the LOE for Sprycel in the U.S. recently occurred on September 1, and the LOE for Pomalyst in Europe happened back in August. Our continued focus on commercial execution enabled us to deliver nearly half of our sales in the third quarter from the growth portfolio. And with the recent U.S. approval and launch of Cobenfy, our sales mix will continue to diversify and provide a stronger foundation for growth. Importantly, we will continue to optimize the strong cash flow generated from the legacy portfolio to invest in growth opportunities. Before going into key brand performance, it's important to note that third quarter sales were impacted by the reversal of an approximate $150 million inventory build from the second quarter. This tempered growth across several brands, primarily Opdivo, as well as Opdualag, Camzyos, and some immunology products. Let's start with our oncology business on Slide 11. Global sales of Opdivo were higher in the third quarter, reflecting solid demand growth outside the U.S. Looking ahead, we continue to expect global full year sales growth to be in the mid-single-digit range. We remain focused on the anticipated approval and launch of the subcutaneous formulation of nivolumab, which, as Chris mentioned, is expected to receive FDA approval by year-end. With this anticipated approval, we will have the potential to extend the durability of our immuno-oncology portfolio into the next decade. Moving to Opdualag, we delivered strong double-digit growth in the third quarter, driven primarily by demand. Three years post-launch, Opdualag has become a standard of care in first-line melanoma in the U.S. with 30% market share. Outside the U.S., third quarter sales benefited from the strong uptake in newly launched markets such as the U.K., Brazil, and Australia. Moving to our cardiovascular portfolio on Slide 12. Eliquis is the leading anticoagulant worldwide and delivered double-digit sales growth in the third quarter. U.S. sales benefited from the higher demand and market share gains. Sequentially, as we've seen historically, U.S. sales included an unfavorable gross to net impact related to the Medicare coverage gap. Outside the U.S., sequential sales of Eliquis reflected higher demand across key markets and favorable inventory compared to the prior quarter. Turning to Camzyos. Third quarter sales more than doubled, driven by strong U.S. demand for new patient starts and an increasing number of patients on commercial drug. During the third quarter, we saw steady patient adoption with nearly 20% growth in patients on commercial drug, more than doubling the number from a year ago. Outside the U.S., sequential sales growth reflected higher demand in newly launched markets in Europe. Now let's turn to hematology on Slide 13. Sales of Reblozyl grew 81% in the third quarter, with strong double-digit growth, both in the U.S. and international markets. The U.S. sales were driven by continued demand in first-line setting, outside the U.S., recent first-line reimbursement in Europe and Japan contributed to the strong performance in the quarter. In cell therapy, sales of Breyanzi more than doubled versus prior year, driven by demand in new indications and improved manufacturing capacity and reliability. In the U.S., sales grew more than 40% on a sequential basis driven primarily by pent-up demand in 2 of our newly approved indications, follicular lymphoma and mantle cell lymphoma. We expect more modest sequential growth from third quarter to fourth quarter as demand normalizes. Also in cell therapy, despite a competitive market, Bema performed well in the third quarter with solid demand growth in both the U.S. and international markets. Now moving to immunology on Slide 14. Sales of Sotyktu nearly doubled when compared to the impact of the $30 million clinical trial purchase in the third quarter of last year. Outside the U.S., sales grew year-over-year, benefiting from the launch in a number of international markets. Looking to the fourth quarter, we expect a step-up in gross to net discounts resulting from increased rebating associated with our approved access position. This would result in the fourth quarter sales being similar to this quarter. As we said previously, we expect that over time, demand growth will offset these pressures. Now turning to the P&L on Slide 15. In addition to solid commercial execution, our third quarter performance demonstrated our focus on financial discipline and steady progress against our $1.5 billion cost savings program. As a reminder, we initiated this program to offset incremental operating expenses from the recent deals. Savings from across the organization include reductions in direct clinical trial expenses, site rationalization, elimination of roles, and a reduction in headcount. As we said previously, we expect the majority of the savings to come through this year. As we realize these savings, we are strategically reinvesting in high potential opportunities to fuel long-term growth and innovation in key areas. Moving to gross margin. We saw a decline in the quarter of about 130 basis points, driven primarily by product mix. Operating expenses, excluding in-process R&D, were impacted by higher deal-related spend, partially offset by savings from our efficiency initiatives. Our effective tax rate in the quarter changed from 11.6% in the prior year to 18.5%, impacted by one-time adjustments in 2023 resulting from newly issued IRS guidance. Overall, third quarter earnings per share were $1.80. Now moving to the balance sheet and capital allocation highlights. We ended the quarter with approximately $8.4 billion in cash, cash equivalents, and marketable debt securities on hand. During the third quarter, both our growth and legacy portfolios delivered solid revenue growth, contributing to robust operating cash flow of approximately $5.6 billion. In terms of capital allocation, we remain focused on strengthening our balance sheet. We are executing our plan to pay down approximately $10 billion of debt. And relative to our position at the end of the first quarter, we have reduced it by $5.9 billion. This includes roughly $3 billion of commercial paper and 2.9% of long-term debt. As we previously have said, we remain committed to our dividend. Our strong cash flow profile enables us to address these priorities while also strengthening our outlook. Turning to 2024 non-GAAP guidance. As is our practice, we provide revenue guidance on a reported basis as well as on an underlying basis, which assumes currency remains consistent with the prior year. We now expect full year 2024 revenue to increase approximately 5% as reported and approximately 6% at constant currency, primarily due to higher-than-anticipated sales of Revlimid. We are pleased with the performance of both growth and legacy portfolios. And in legacy, we have updated our full year sales estimate of Revlimid to approximately $5.5 billion. As a reminder, for modeling purposes, in addition to Revlimid, other legacy brands should soften in the fourth quarter due to competition from generics for Sprycel and Abraxane in the U.S. and Pomalyst in Europe. Turning to gross margin. We now expect a slightly tighter range to reflect the impact of our U.S. sales mix. Excluding acquired in-process R&D, we now expect total operating expenses for the year to increase approximately 4% to 5%. This increase reflects higher fourth quarter spending to support our product portfolio and pipeline and is in line with fourth quarter increases seen in previous years. These costs are partially offset by savings from our productivity initiatives. We remain confident in our ability to achieve our full year operating margin target of at least 37%. For OI&E, we have increased our estimate from approximately $50 million of expense to approximately $125 million of income due to better-than-expected royalty and interest income. As a reminder, our tax rate was impacted by the nondeductible charge for acquired in-process R&D, primarily from the Karuna acquisition in the first quarter. Excluding the acquired in-process R&D, we continue to expect estimated underlying non-GAAP tax rate for the full year to be approximately 18%. Taking these updates into effect, we are raising our non-GAAP EPS guidance to a range of $0.75 to $0.95. In closing, our third quarter results were marked by significantly higher sales across key growth brands, robust cash flow generation, and continued financial discipline. As we reestablish our presence in neuroscience with the U.S. launch of Cobenfy, we are excited about the long-term opportunity of this brand and its potential to serve more patients. We're looking forward to additional near-term catalysts as our pipeline continues to advance. Our solid performance year-to-date supports our raised full year guidance and our increased confidence in our ability to drive long-term sustainable growth. And with that, I'll now turn the call back over to Chuck for Q&A.

Operator, Operator

And your first question will come from Evan Seigerman with BMO Capital Markets.

Evan Seigerman, Analyst

Congrats on the progress this quarter. So one for Adam, now that you have approved. Can you walk us through what the next year looks like when it comes to access? I know there's a lot of puts and takes when it comes to Medicaid and commercial. But maybe give us some color as to how we should think about it?

Chris Boerner, CEO

Adam?

Adam Lenkowsky, Chief Commercialization Officer

Yes. Thanks, Evan, for the question. We're very excited about the approval of Cobenfy. As you heard from Chris, it is the first innovative therapy approved in schizophrenia in decades. And we're very pleased with the label that does not carry the atypical antipsychotic class warnings and precautions or a box warning. And so how we think about this addresses a large market. Remember, there are 1.6 million people treated for schizophrenia each year in the U.S. We do see this as a 2025 launch with the launch picking up after attaining broad access. We expect to see sales ramp in the second half of the year, and I'll describe those dynamics. First and foremost, we're really excited that the product is available this week. Our field teams are out now selling. They're engaging with customers. And so we'll see stocking this year. Now access is a gating factor to sales uptake as over 80% of patients are either Medicare or Medicaid. And just remember, schizophrenia is a fundamentally different market than markets that are highly PBM driven. So we expect to take about a year to achieve 80% to 85% access. It could move a bit faster in Medicaid, and we're certainly going to work to accelerate that. So the way to think about it is really in a step-wise fashion. In Medicaid, recall roughly half of the states have 0 to 1 step access. And so deep Medicaid P&T meetings will take place over the course of the next several months. We've already seen a few states come online this week. Physicians can prescribe once P&T reviews are completed, and we are working to expand access across the remaining states. Now in Medicare, recall this is a protected class. So payers have 90 days to make a coverage decision, and we expect to see mandatory coverage determinations in Q1. But in the meantime, physicians can push through medical exemptions before any of these formulary reviews take place. Our asset teams have been meeting with payers for some time, and our team met with payers immediately post approval to review the approved label, and the response has been very, very positive. So again, we know the work that we need to do to maximize this important launch, and we plan to make this a very big product for our company over time.

Operator, Operator

Next question will come from Chris Shibutani with Goldman Sachs.

Chris Shibutani, Analyst

You've made significant strides in managing the operating expense profile, and at the same time, you're seeing improvements in revenue. What can we anticipate for 2025 in terms of this trend? Any initial insights into how the top line dynamics for 2025 might relate to operating expenses would be valuable.

Chris Boerner, CEO

Thanks, Chris. I'll ask David to take that one.

David Elkins, CFO

Yes, Chris, thanks for the question. We feel very positive about the progress we're making on our $1.5 billion savings initiatives. We're on track to achieve most of that this year. Additionally, we're confident in the operating margin guidance we've provided of at least 37% for this year and next year. We're continually seeking efficiencies in our cost base, and you'll hear more about that. Regarding 2025, we will provide complete guidance as we normally do during our fourth quarter earnings call.

Operator, Operator

Your next question will come from Chris Schott with JPMorgan.

Chris Schott, Analyst

Just maybe a two-parter on Thank you for all the details on the reimbursement piece. Once reimbursement is in place, can you just talk about how you're thinking about the ramp of the drug from there? I guess, historically, I think we've seen more gradual launches in schizophrenia, but these are largely assets with similar mechanisms to existing products. I'm just wondering in this case, are you anticipating this could be a faster ramp than we've historically seen given the unmet need and your unique mechanism of action? And then just my second part on the same product is just when you think about the additional line extensions here, what's your confidence in the bipolar 1 opportunity? It's obviously a very large market and live data you've seen in schizophrenia, do you view that as a high probability of success study as you start to ramp that one?

Chris Boerner, CEO

Thanks, Chris. Adam will take the first part, and then Samit can chime in as well.

Adam Lenkowsky, Chief Commercialization Officer

Yes, Chris, thanks for the question. First thing I'd say is there's really no perfect analog here because unlike previous launches, where you've seen multiple success of approvals, for example, schizophrenia and Major Depressive Disorder, that's not going to be the case with approval cadence which is going to be in schizophrenia, first in monotherapy and then adjunctive therapy. As I said, in terms of the ramp, as we see the launch and access coming online, really this is going to be a second half ramp. That's how we see it. So physicians can prescribe today, push through medical exemptions before formulary reviews, but we expect to see really full access 80 to 85% within roughly 12 months post-approval.

Samit Hirawat, CMO

Yes. And thanks for the question, Chris. If you think about bipolar, so if you think about mania in general, bipolar 1 includes symptoms that are excessive activity as well as the psychotic symptoms of delusion, hallucinations, and thought disorders. Then xanomeline, especially as we think about it, has demonstrated reduction of these agitation symptoms in Alzheimer's disease as well as in schizophrenia. Alzheimer's data, of course, came from the 1997 study that was published in the past. So these are all predictive of efficacy potential in bipolar mania. There is no evidence thus far in the studies that have been conducted in the emergent program that shows a worsening of the depressive symptoms. So taken together, we are looking forward to initiation of that program in bipolar mania in the middle of 2025. Just to also add, on top of that, beyond bipolar in 2025, we are looking forward to the readout of the ARISE trial, which is the schizophrenia trial. And of course, 2 additional indications that we will be initiating in 2025 will be Alzheimer's agitation as well as recognition.

Operator, Operator

Next question will come from Luisa Hector with Berenberg.

Luisa Hector, Analyst

On Sotyktu, you mentioned the price impact in Q4, but could you add a little more color on the outlook for next year and the access and pricing as we roll into next year? And then perhaps just a reminder of the profile that you're looking for in the Psoriatic Arthritis Trial.

Chris Boerner, CEO

Adam can take the first one and then, Samit.

Adam Lenkowsky, Chief Commercialization Officer

Thanks, Louisa. As we said in the past, the Sotyktu performance has been slower than we'd like, and we are making progress on executing against our plan and that's securing favorable access and ultimately improving performance and execution. Recall, we had 25% access in the first half of the year. We more than doubled that in Q3. We now have approximately 50% zero-step edits in the market. And I could say we are having productive conversations with the remaining payers and expect to enable broader access and adoption in 2021. But this comes with significant rebating and gross net impact that will be compensated by increased volume over time. It's going to take a few quarters for that to wash out. In fact, in Q3, you saw some of this. We saw some of the pull-through delivered both versus prior year and sequentially when you exclude clinical trials. So this is a market that is going to remain highly competitive, and we're going to continue to work to increase more market share as well as paid prescriptions. But as we exit this year, we will be in a better position versus where we started the year, and we're going to work to be more competitive.

Samit Hirawat, CMO

Thanks for the question, Louisa. For the arthritis part. Remember, we have been able to pull and accelerate the readout of the second study as well. So we are looking forward to the readout towards the end of this year for both POETYK-PsA-1 and POETYK-PsA-1 within 2024. Overall, as you can imagine, since a lot of data has now been generated from a safety and efficacy perspective for Sotyktu, the readout of the program will put us in the right footing as we think about the competitor profile versus Otezla as well. So looking forward to that, we have no concerns from a safety perspective, as we've said, so hopefully, the studies read out positive that will lead to a filing in 2025.

Operator, Operator

The next question will come from Geoff Meacham with Citibank.

Geoff Meacham, Analyst

For Chris or Samit regarding the Milvexian program, you previously mentioned the possibility of increasing the trial size. What do you believe is the reason for the lower event rate? Does this alter the risk profile? Considering that GLP-1s influence cardiometabolic trials, do you think commercial changes could have affected the event rate in your study?

Chris Boerner, CEO

Thanks, Geoff. I'll start, and then I'll turn it over to Samit. Let me just say at the outset, Geoff, that we're encouraged by what we're seeing with this program. Just a reminder, we're developing Milvexian because there remains high unmet need for patients in anti-coagulation. That's particularly true in atrial fibrillation, where as I think you know, this is an area where 40 million individuals worldwide have atrial fibrillation. And that despite the success of Factor Xa like Eliquis, about 40% of those patients remain on or undertreated due to the risk of bleeding. And we believe Milvexian has the potential to improve the outcome for these patients. The update that we provided today is really intended to give some context to the decision to increase the sample size given the encouraging blended event rates that we're seeing at this point in the study. This is a potentially important medicine. We want to do everything we can to ensure that the program continues to read out in 2027. But before I turn it over to Samit, I want to leave you with, we're encouraged by what we're seeing here, and we look forward to seeing this study come to its outcome in 2027. Samit?

Samit Hirawat, CMO

Yes, thanks, Chris. Geoff, to build on Chris's comments, let's remember where we began with the program. In our trial for AF, it was evident that the dose was a critical factor in the outcome. We initiated the Milvexian program with well-structured Phase 2 studies that helped us determine the appropriate doses for our Phase 3 trials in AF and in combination with other agents in ACS and SSP. Additionally, our event rate is lower than what we originally designed the study for, which allows us to consider increasing the sample size, and you will see the updated numbers on clinicaltrials.gov. Moreover, the genic study was halted after the DMC assessed the data and noted an event rate nearly three times higher in the investigational arm of that study. Our study is also regularly reviewed by the DMC, and they have not indicated any concerns that would lead us to change our course; they support our decision to continue the study at this point. We are genuinely encouraged by these developments. As you know, the ACS and SSP programs are expected to report findings in 2026, and we are on track for that.

Operator, Operator

Next question will come from Carter Gould with Barclays.

Carter Gould, Analyst

Maybe I don't mean to hammer on it again, but just wanted to follow-up on the prior question for Samit there. With the increased patient enrollment, will there be any shift in the criteria or enrichment of patients away from the proximal segments? I mean, I appreciate your commentary on what happened to your competitor, but at the same conversation at ESC, there was talk about the challenges in those populations given especially what seems to be going on here at the event rate. Any color would be appreciated.

Samit Hirawat, CMO

Yes. Thank you, Carter. There are no plans to change any of these criteria. We will continue to observe them, and the study will continue as is, except for the change in the sample size.

Operator, Operator

Next question will come from Mohit Bansal with Wells Fargo.

Unidentified Analyst, Analyst

This is Serena on for Mohit. We wanted to dig more into the KarXT development plans as it relates to cognition. Perhaps starting with the Alzheimer's disease psychosis trial, I was wondering if it will still have the 3x in one day dosing and longer titration period. And then moving on to the cognition trial. Was wondering what this could look like, like would it need to be longer than the emergent studies? And do you plan to enrich for patients cognitively impaired at baseline?

Samit Hirawat, CMO

Yes. Thank you, Serena, for the question. So we're looking forward to, obviously, the initiation of 3 Phase 3 programs next year, 1 in AD agitation, second in bipolar mania, and third in the AD cognition program. The reason for belief, of course, is the dual mechanism of action in terms of M1 and M4 direct agonism that is obviously associated with xanomeline as well as the available data from the older studies that were conducted with xanomeline that already showed the right trend in terms of cognition improvement in those studies. Your question around the 3x a day dosing, right now that is built into the AD psychosis program. We are working on the BID dosing for these patients, and there will be instituted in the new study that we will start in the 3 indications that I talked about as well as we are thinking about how we will institute a bridging program so that we can bring it back into the AD psychosis program as well. Overall, in a good track and certainly looking forward now to the readout of the ARISE study next year.

Operator, Operator

Next question will come from Trung Huynh with UBS.

Trung Huynh, Analyst

Just one on the recent PMRT5 data. We saw an ORR of 21% across a bunch of solid tumors. Can you perhaps talk about efficacy as regards to durability that you're seeing here with the product? And what tumor types are you going to be prioritizing?

Samit Hirawat, CMO

Thank you for the question. We find the data to be very encouraging. When we analyze the enrolled tumor types, non-small cell lung cancer stands out with an overall response rate of about 31% and strong durability. It's important to note that responses tend to occur later, indicating a long-term control for patients on the drug, with many experiencing disease control for an extended period. The duration of response is currently at 10.5 months. The stable disease rates show a similar trend within the non-small cell lung cancer population. We also observed promising results in the pancreatic cancer patient group, particularly at the 400 and 600-milligram doses, where increased response rates and excellent durability were noted, with some patients showing responses lasting nearly a year. Both indications appear very promising, and we look forward to providing updates on the later phase development for this program next year.

Operator, Operator

Next question will come from Steve Scala with Cowen.

Steve Scala, Analyst

I have two points and two questions. The first is a clarification: one percentage point of Bristol's revenue growth is about $500 million, which is the amount by which Bristol is increasing its guidance. Is the increase entirely due to Revlimid? Secondly, I apologize for returning to Milvexian, but the AFib trial had a lower-than-expected event rate and did not succeed. Why is a lower-than-expected event rate in the Milvexian trial considered encouraging? It could easily be seen as a risk, I think. I understand the DSMB point, so any clarity would be appreciated.

Chris Boerner, CEO

Thanks for the question, Steve. I'll ask David to start and then we'll flip over to Samit.

David Elkins, CFO

Yes, Steve, thanks for the question. And look, we saw a strong performance in our growth portfolio as we talked about. And that's why we also saw good performance and raised the Revlimid guidance to $5.5 billion, and that caused us to raise the full year outlook 5% growth versus prior year on a reported 6% excluding currency. The other thing I would note, too, is, as I said on the call, we have generic entry coming in on Sprycel, Abraxane, and Pomalyst. The already facing generic is Pomalyst. So we just want to make sure that people update their models for the additional generic erosion in the fourth quarter. But net-net, when we put all that together, as we said, we raised our revenue guidance as a result.

Samit Hirawat, CMO

Thank you, Steve. This is Samit. That's a great question. To recap, when we look at the event rate for asundexian compared to apixaban, apixaban had a rate of 1.03 while asundexian was at 2.33, if I recall correctly. Moreover, in our planned Milvexian study, the anticipated event rate is 1.33. Overall, as Chris mentioned, we are seeing a blended event rate that is significantly lower than the planned rate. We are encouraged by these results and do not see it as a concern. The Data Monitoring Committee continues to review the situation and is comfortable with us proceeding with this study, and we are also increasing the sample size.

Operator, Operator

Next question will come from Courtney Breen with Bernstein.

Courtney Breen, Analyst

Another question just on the Covent launch. What I wanted to make sure we were able to understand is because some of the practicalities around kind of a patient receiving a script and kind of the doctor choosing that patient to prescribe to. Can you share some of the context on the warnings and precautions in the label, particularly around liver and how many patients you practically expect to be managed through these challenges? I do note that obviously, there isn't the box label warning, but there are some warnings that require extra physician attention. And so can you just speak to some of those challenges?

Adam Lenkowsky, Chief Commercialization Officer

Courtney, thanks for the question. Just as you know, Cobenfy offers efficacy that is at least as good or better than Zyprexa, without the significant adverse events that have plagued D2s. We keen dyslipidemia, EPS, sedation, those are the ones where they lead to the greatest level of discontinuation and why you see patients stop treatment and physicians re-challenge with another agent. We're very pleased with the label, and we're just at the beginning, but the progress and the feedback that we're hearing have been very, very positive. When you look at some of the monitoring that's in the label, remember, the large majority of patients have had recent lab assessments. So we don't anticipate this to be a barrier. In the label, this is recommended. It's not mandated and lab assessments are very common in this patient population. Most antipsychotics today recommend lab assessments. So we don't see it as an issue for adoption. And when you look at renal impairment in patients with schizophrenia, it's in the mid-single digits. So taken together, we are very pleased with the efficacy profile that is unique to Cobenfy, based on its mechanism of action and its best-in-category safety profile.

Samit Hirawat, CMO

And just to add to what Adam is saying. You will also see the data on longer-term studies, EMERGENT-4 and EMERGENT-5, hundreds of patients who have been treated through those as well. And the safety profile continues to remain the same, but certainly efficacy maintained. So that, in addition, gives us a lot of confidence in the overall profile for Cobenfy as Adam said.

Operator, Operator

Next question will come from Seamus Fernandez with Guggenheim Securities.

Seamus Fernandez, Analyst

Wanted to just get a sense for your enthusiasm for the upcoming data at ACR for your CD19 asset? And how you see the evolution of a potential market for intensive immunologic treatments like this versus the potential for whether it be T-cell engagers or bispecific products with a similar type target profile, but perhaps less efficacy. And then just the second question is on the 2025 dynamics. Just hoping to get maybe a little bit of a better sense of the sort of pushes and pulls on IRA. I know you've said that you expect it to be largely neutral, but it does seem like there are opportunities to potentially increase volume in that context. And I just wanted to clarify whether or not any volume benefits are incorporated into your assumptions around that neutral assumption?

Chris Boerner, CEO

Samit, maybe you can start and then turn it over to Adam.

Samit Hirawat, CMO

Thank you, Seamus. That's a great question. I want to address two aspects regarding our drug development. Firstly, let's talk about our CAR T cell therapies, which represent a groundbreaking method for treating autoimmune diseases, as supported by emerging data from various sources. We are excited to soon share our own data. It's important to note that we initiated our study at the end of November last year, with the first patient being dosed in November 2023. We are looking forward to presenting this data at ACR. As we do so, there are a few key points to consider: the demographics of the patients enrolled in these studies, the severity of their diseases, the changes in B cell dynamics post-treatment, including B cell depletion and reemergence, the impact on remission after the halt of their immunomodulator or immunosuppressant treatments, and the safety profile, particularly because many of these patients may have existing organ damage. While the patient numbers are small, we plan to provide updates at ASH with more data from additional patients and extended follow-up, along with insights into further indications. The second part of your inquiry pertains to the cost of T-cell engagers bispecifics. This is indeed a crucial factor to consider. Recent publications regarding BCMA-directed therapy and a case report for CD19 directed T-cell engagers have shown promising results. We need to determine which patients will benefit from CAR T cell therapies versus those suitable for bispecifics, keeping in mind that bispecifics will necessitate repeated doses, whether weekly, bi-weekly, or every four weeks. The duration of this treatment also needs to be established. These are still open questions regarding T cell engagers. We previously halted the development of a BCMA T cell engager for multiple myeloma, but we plan to initiate several studies in 2025 to explore the use of BCMA-directed bispecifics in those diseases. Adam?

Adam Lenkowsky, Chief Commercialization Officer

Yes. So just the question around the changes to the benefit design as it relates to IRA. So with the elimination of the coverage gap, we expect favorability with Eliquis next year due to CAR T redesign with the elimination of the coverage gap. But that's going to be offset largely by products like Revlimid and Pomalyst in the catastrophic phase, where we're now responsible for 20%. So there are pushes and pulls with IRA opportunities, including patient affordability, also with changes in the CAR T benefit design. But taken together, we see this as essentially net neutral across our portfolio.

Operator, Operator

Next question will come from Matt Phipps with William Blair.

Matt Phipps, Analyst

Just wondering how you all view the market opportunity for the GPRC5D CAR T maybe relative to Abecma, given you've now moved the 5D program into a second-line Phase 2 trial, do you think the profile is strong enough to really challenge a BCMA CAR T? Or would it be used after a BCMA CAR T? And Chris, what type of are you going with tonight?

Chris Boerner, CEO

So we'll start with Adam, and Samit, you can chime in as well.

Adam Lenkowsky, Chief Commercialization Officer

We have initiated the study with our GPRC5D agent and plan to advance it quickly into Phase 3 registrational trials. We are very optimistic about the results we have observed so far. It's important to note that this asset will be utilized after BCMA CAR T treatments in a competitive landscape. With a single dose and the favorable toxicity profile we are observing with GPRC5D, we believe there is a significant opportunity for this asset to emerge as another leading cell therapy for our company.

Operator, Operator

Next question will come from David Risinger with Leerink Partners.

David Risinger, Analyst

So I'll just keep it to one high-level question, please. So Chris, I think you mentioned a few times on the call that you see Bristol-Myers as a sustainable growth company. Could you just provide some more context on that, your sustainable growth expectations in light of 2026 revenue pressures and the end of the diabetes royalty stream?

Chris Boerner, CEO

Thanks for the question, David. Yes. Look, as we have said consistently, our North Star since I took over as CEO in November has been that we execute in the short term and stay focused on building a company that will deliver long-term sustained growth and shareholder value, particularly as we work our way through the middle of the decade exiting with a very strong growth profile towards the end of the decade. And as I think about the way that we continue to build confidence in that, I would say, I'd highlight 3 things. First, we have a young portfolio of growing assets. You've seen that in the quarterly results. And we're squarely focused on continuing to drive performance in this growth profile. We've got products like Cobenfy, which just launched very early in its life cycle. Clearly, schizophrenia is important. You're going to see additional indications, notably the adjunctive indication in 2025. Breyanzi continues to show very solid and strong growth in cell therapy. And remember, that's at the tip of a pipeline of assets we've discussed this morning in fact, that look promising, including CD19 and GPRC5D. We saw continued steady growth for Reblozyl and Camzyos. We would expect that to continue. Those 2 products have line extensions coming up in the next 12 months. And of course, we've talked considerably about Opdualag and nivo subcu providing a foundation for our I-O business through the end of this decade and into the next. And then when you step back from that, the second thing that's encouraging is we continue to see very good progress in our late-stage pipeline. We've talked about Milvexian and the encouraging progress of that program in AFib as well as the 2 other additional indications we're running in parallel. We're excited about LPA1. And remember, we have multiple Phase 2 programs that have demonstrated efficacy and safety for that program. So we're excited to see that play out. Iberdomide and mezigdomide give us opportunities in multiple myeloma. And these are products that have important readouts over the next 12 to 24 months. So we've got continued excitement in the late-stage pipeline. And then across all of our businesses, we've maintained financial discipline. That gives us the ability to have a solid balance sheet. Our P&L looks good, and that gives us strategic flexibility to continue to invest both in our internal program as well as source innovation externally as we did with the Karuna acquisition, for example, in December. So if I add it up, I think those are the core components of how we continue to build conviction in the sustainable growth that we're looking to drive for the company.

Operator, Operator

Next question will come from Akash Tewari with Jefferies.

Akash Tewari, Analyst

Given that there's been reports of J&J shutting down their cardiometabolic division, is there any potential for your team to renegotiate your partnership with them around Milvexian? And on subcu Opdivo, your team doesn't seem to be guiding for branded reps beyond the FDA regulatory protection which is a market contrast to what Merck is communicating on subcu KEYTRUDA. Any color on why your team seems to be more conservative here?

Chris Boerner, CEO

Got it. Sorry, we just missed that. So with respect to J&J, no change in our partnership with J&J. J&J has communicated that they continue to be squarely supportive and engaged on the Milvexian program. And in fact, their work on the ongoing Phase 3 programs continues to be very, very good, and we've got a very good relationship with J&J on that program. And then Adam, I'll ask you to take the second.

Adam Lenkowsky, Chief Commercialization Officer

Yes. Regarding the subcu. First, we look forward to the PDUFA date for the nivolumab subcu in late December. Launch planning is progressing very well. And we talked about shifting at least 30% to 40% of the total U.S. Opdivo business; we can do that ahead of the LOE, which is in late 2028. As far as the extension of the I-O franchise, this is what excites us potentially about this product because not only does subcu address the treatment burden for patients and physicians with a 3- to 5-minute fusion time, as well as an optimal injection, what this is going to do based on the broad patent state for the subcu, it will allow us to extend our franchise into the next decade.

Operator, Operator

Next question will come from James Shin with Deutsche Bank.

James Shin, Analyst

I just want to go back to Milvexian real quick. I really appreciate the update on the stroke and embolism event rates. But was there any separation between the arms? And perhaps even more importantly, do you have any color on bleed rates?

Samit Hirawat, CMO

Thank you, James, for the question. Obviously, we can't look at those from a by-arm perspective. This is a blinded study. We don't get to see the data that way. It's a blended event rate that we can talk about, and we don't get to the specifics of the general profile of the drug at this time.

Operator, Operator

Next question will come from Olivia Brayer with Cantor.

Olivia Brayer, Analyst

Can you guys talk through what you're looking to see in that adjunctive schizophrenia data set next year? And when you think about uptake in that setting, are you getting any early feedback around potential off-label use from potential early adopters? I mean, how big of a market do you think that could realistically be just given the focus on making monotherapy use a standard of care? Also, I just wanted to ask a quick clarification on Milvexian timelines. I know it's still 2027, but should we assume that it's later in the year considering today's update?

Chris Boerner, CEO

Thanks for the questions, Olivia. Maybe we'll ask Samit and Adam to get those questions between the 3 of them.

Samit Hirawat, CMO

Thank you, Olivia. It's important to note that patients are currently being treated with available antipsychotics without official label approval, often using combinations of D2 agonists. It was essential for us to gather data that demonstrates both the efficacy and safety of using Cobenfy alongside the therapies that patients are already receiving. The goal is to highlight what Cobenfy can offer as an adjunctive therapy, based on results from the ARISE program. This study is significant and is expected to conclude in 2025. Regarding Milvexian, the 2027 timeline refers to an event-driven endpoint in the trial, so we cannot predict a specific timing within that year. Therefore, we provide general guidance for 2027 as previously mentioned.

Adam Lenkowsky, Chief Commercialization Officer

Yes. Currently, psychotic patients use D2s to achieve better efficacy, and about 20% to 30% of them, even without FDA approval for adjunctive treatment, may benefit from Cobenfy as an adjunctive option. Samit mentioned the ARISE study, and we are focused on generating evidence for this. It makes pharmacological sense to add M1 and M4 alongside a D2, as there could be synergistic effects. We are eager to see the results of the study. However, it's important to note that our teams will prioritize on-label use in schizophrenia to make Cobenfy the standard of care. While it is not our decision, patients may choose to use Cobenfy off-label due to the product’s safety profile. We are looking forward to the data readout next year regarding Juno schizophrenia, as well as other data on Alzheimer's psychosis, which could significantly contribute to the growth of this product.

Chris Boerner, CEO

And I would just remind you what Adam ended on is really important, which is that this is a product that, obviously, we're super excited about the initial indication in schizophrenia. We've got the adjunctive data coming, but this is a product that will continue to generate new line extensions with a very robust clinical development plan that we put in place for it.

Operator, Operator

Next question will come from Sean McCutchen with Raymond James.

Sean McCutchen, Analyst

One more on Cobenfy. Can you speak to your view on the import of the M1 component for Cobenfy as it relates to potentially driving targeted improvements in schizophrenia in particular, what proportion of the population have cognitive deficits? Do you expect these patients to be kind of parsed out in the monotherapy setting or post atypical, or in the setting? And what are your comments to those that are looking at the BID regimen and GI adverse effects as potential barriers on ease of use in this patient population where compliance or lack thereof is a significant variable when thinking about your competitors that are coming up behind you.

Samit Hirawat, CMO

Thank you. The key feature of Cobenfy is that it functions as a dual direct agonist, unlike some other therapies being developed that target the M4 receptor indirectly as allosteric modulators, which depend on a ligand being present in the brain. The M1 receptor is crucial since it is linked to cognitive function. Consequently, having a direct effect on both M1 and M4 allows us to significantly influence cognition. This is particularly relevant for Alzheimer's disease patients, as cognition plays a critical role in their overall well-being and quality of life. A significant number of patients experience cognitive impairment and could qualify for treatment if the data is favorable. This is why we've structured our program to address all three aspects of Alzheimer's disease, focusing on psychosis, agitation, and recognition. Adam?

Adam Lenkowsky, Chief Commercialization Officer

Yes. So it relates to the dosing regimen for that step back and just talk about the leading cause of discontinuation. Number 1 is efficacy, and Cobenfy delivers unsurpassed efficacy, efficacy that's at least as good as a Zyprexa. And the other areas of high-level discontinuation include areas like weight gain, include infections, dysfunction, trouble concentrating, and excessive sedation. And so now physicians don't need to trade that off. People living with schizophrenia commonly manage multiple medications at significantly higher rates than the general population. In fact, when you look at patients with schizophrenia, they're on average 7 pills a day which includes our antipsychotic. It could include different psychotropic medications, including anti-depressants, anti-anxiety medications as well as medicines to combat the adverse events of their existing products. So yes, we're going to need to manage this, but we don't believe that this will impact uptake based on the unprecedented efficacy that has shown. Last thing I'd mention is we saw very low discontinuation rates in our clinical trial due to the fact that patients that robust efficacy that the product is well tolerated, and we will provide support to both patients and caregivers to maximize compliance.

Chuck Triano, Senior Vice President of Investor Relations

I know you all have a busy morning in the space. So we'll take our last question, and then we'll turn it to Chris for some brief closing remarks.

Operator, Operator

The last question will come from Srikripa Devarakonda with Truist Securities.

Srikripa Devarakonda, Analyst

Congratulations on the quarter. I would like to ask about your program. You recently shared data from a Phase 2 trial with mavacamten. Can you explain how this relates to the drug you’ve mentioned for HFpEF? What kind of market size do you anticipate? Also, could you remind us of the timelines for this program?

Samit Hirawat, CMO

Thank you for the question. HFpEF is an important indication. We have always indicated that as we consider myosin cardiac inhibitors, their impact on cardiac function and remodeling is significant. We wanted to test this initially with mavacamten in a small group of patients, which provided insights through our biomarker work with NT-proBNP and other measurements, giving us confidence to proceed with the program. We then transitioned to MYK-224, the second program available to us, highlighting the advantage of having two cardiac myosin inhibitors. That trial is currently enrolling well. We are now extending the Phase 2a study to recruit more patients and generate additional data. We expect to have the Phase 2 data readout in the next couple of years, followed by the initiation of the Phase 3 program based on the doses identified in Phase 2. We anticipate that the Phase 3 results will come in the early part of the next decade. While we don't have a specific timeline for the year, we are excited about our progress so far and look forward to the initiation.

Adam Lenkowsky, Chief Commercialization Officer

Yes. As far as the opportunity, this is a large opportunity where HFpEF affects around 3 million people in the United States and that is expected to grow significantly over the course of the decade. In fact, the heart failure drugs, the category is valued at over $12 billion in 2022, and we expect this to almost double by 2032. So this is a significant opportunity, and we're really pleased with what we're seeing early on with MYK-224.

Chris Boerner, CEO

Thank you, everyone, for joining us today and for your insightful questions. I’d like to share a few thoughts on our quarterly performance. First, as you've likely gathered from our discussion, we remain focused on execution. The growth portfolio is now contributing nearly half of our total revenue, driven by strong demand for key products such as Reblozyl, Breyanzi, Camzyos, and Opdualag. Second, the approval of Cobenfy is a significant milestone. We've been diligently working towards this since finalizing the Karuna transaction, and it represents an important treatment for patients as well as a key growth driver for our portfolio. Third, we are advancing our innovative pipeline in various therapeutic areas. We've had several key readouts this year, with more expected before the end of the year and early next year. Lastly, our commitment to operational excellence is producing results, and we will continue to focus on driving value throughout the organization. Thank you again for your time today, and our team is available for follow-up questions. Have a great rest of the day.

Operator, Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.